PPF Rate Hike: Investors of small savings schemes may get good news soon. In fact, there may be an increase in the interest rate on PPF, Sukanya Samriddhi Yojana (SSY) and Senior Citizens Savings Schemes. Today i.e. on June 30, 2023, there is a change in the interest rates of small savings schemes.
New Delhi: There is good news for investors of small savings schemes. There may be an increase in the interest rate on PPF (PPF), Sukanya Samriddhi Yojana (SSY) and Senior Citizens Savings Schemes. The government can give good news to those investing in Public Provident Fund ie PPF. In fact, the interest rates of small savings schemes are to be changed by the end of this month on June 30. The Finance Ministry is about to review the interest rates of small savings schemes. It is expected that the interest rates of PPF may be increased for the second quarter of the financial year 2023-24 from July to September. It can be announced today.
Rates have not changed for many years
Explain that the central government has not revised the interest rate of PPF since April 2020. It has remained at 7.1 per cent since then. Interest rates on several other small savings schemes including Senior Citizen Savings Scheme (SCSS), National Savings Certificate (NSC) and Sukanya Samriddhi Yojana have been hiked in the last two quarters. The Reserve Bank of India (RBI) had increased the repo rate by 2.5 per cent since May last year. In such a situation, investors are expecting that the government may increase the interest rate of one of the most used small savings schemes during the next review.
How is PPF interest rate calculated?
To know whether the interest on PPF will increase during the July-September quarter, you need to understand how the interest rate is calculated. Explain that the interest rates of small savings schemes are linked to the 10-year government yield in the secondary market. The central government reviews the interest rates of small savings schemes every quarter based on the government security yields of the last three months. This is in line with the recommendations of the Shyamala Gopinath Committee, 2011 to ensure that the interest rates for small savings schemes are market linked.
Will PPF interest rate increase?
According to the data, the benchmark 10-year bond yield from March to May 2023 has averaged 7.3 per cent. As per the formula, the PPF interest rate will be 25 basis points higher than the average 10-year G-Sec yield of the respective maturity. So strictly following this process, the PPF rate should ideally be 7.55 per cent. However, according to experts, there is a gradual decline in benchmark yields, which casts doubt on the possibility of a PPF rate hike.
